Japanese government and business officials have flocked to Myanmar in recent months with a keen interest in the untapped investment opportunities in the country, which is embarking on democratic and economic reforms after decades of seclusion.

Japanese entities that have been nurturing ties with Myanmar are encouraged that the time has finally come for various cooperative projects to resume operations after years of being in limbo under the country's military regime, while Myanmar welcomes Japan's assistance.

"With Myanmar's government starting to open up to the international community, what we have been working on for all these years may finally bear fruit," said Shigeto Kashiwazaki, managing director of Asian Business Research Department at the Daiwa Institute of Research.

Kashiwazaki was referring to a quasi-stock exchange called Myanmar Securities Exchange Centre Co. (MSEC) that Daiwa Institute, under Daiwa Securities Group Inc., and the Myanmar Economic Bank, the country's largest bank, set up as a joint venture in June 1996 with the aim of developing a securities market in Myanmar.

U Soe Thein, executive director at MSEC said he is "always positive to any assistance given" by Japan and "appreciates all of those programs." Before working at MSEC, he worked as a public official for more than 40 years and was involved in receiving Japanese assistance.

Japan has provided aid to Myanmar since 1954, including grant since 1975. In cumulative terms, Japan is the top provider of official development assistance to Myanmar at $3.27 billion as of 2010. It also began providing loan aid in 1968 although it has suspended giving new loans since 1987 due to delays in repayments.

Soe Thein noted that technical assistance from Japan may be even "more beneficial" if its training programs are specially designed for a target country, and if the trainers or lecturers in the programs have knowledge or experience of the nation.

"Having in mind these realities, both sides should try to mitigate the adverse impacts and maximize the benefits," said Soe Thein in an email to Kyodo News.

MSEC was set up in response to a request by the Myanmar government, which wanted to prop up the market economy in the country. But to date, at MSEC, with 11 staff members, including two Japanese, the shares of just two firms and some government bonds are traded.
The 1997 Asian financial crisis prompted Myanmar to tighten regulations for financial institutions and as a result many problems with its financial regime, including the existence of multiple exchange rates, an opaque legal framework and weak banking system, were left unresolved, making it difficult for foreign firms to do business there.

The imposition of economic sanctions by the United States and European countries, the Myanmar junta's crackdown on pro-democratic parties such as the one led by Aung San Suu Kyi, and reports of human rights abuses since the 1980s also dissuaded the Japanese government and businesses from deepening economic ties with Myanmar.

"Our joint project to develop a securities market in the country has been virtually halted for more than 10 years," Kashiwazaki said. "But now as Myanmar implements economic measures, we can finally get down to business."

Myanmar, a country with abundant resources and a cheap labor force, is widely seen as the last untapped market in Asia. Since a military-backed civilian government took over power from the junta in March last year and implemented a series of democratic reforms, it has attracted investment interest from firms around the globe.

Japan and Myanmar have decided to launch negotiations on a bilateral investment treaty following Japanese Foreign Minister Koichiro Gemba's visit to the country in late December, the first visit by a Japanese foreign minister to Myanmar since August 2002.

Such a pact, if realized, would help improve the levels of protection and liberalization of investment and make it easier for Japanese companies to do business in Myanmar.

Economy, Trade and Industry Minister Yukio Edano also visited the country in January, accompanied by around 100 business representatives and ministry officials, including senior executives from trading house Mitsui & Co., Sharp Corp. and Toshiba Corp., and expressed Japan's plan to help vital infrastructure projects in Myanmar.

"Myanmar is a key junction that connects Southeast Asia and China. I have no doubt about its growth," said Takashi Kawamura, chairman of the board at Hitachi Ltd., who participated in the business visit led by Edano.

"Japan should be able to make a strong showing (in Myanmar) such as through its energy-saving technologies," Kawamura said during his visit to Myanmar.

The Japan International Cooperation Agency, Japan's aid agency, has also stepped up efforts to assist Myanmar. In December, it invited 30 business people and government officials from the country, including from the Myanmar Central Bank and the Ministry of Finance and Revenue, for a three-week training program in Japan, where they received lectures such as on Japanese farming, monetary systems and automobile manufacturing.

"We organized such a training program so that promising people from Myanmar will learn from our knowledge and expertise," said Tomonori Nagase, an official at JICA's Southeast Asia and Pacific Department.

"But at the same time, through such a program, we hope to forge better ties between Japan and Myanmar by getting to know each other," he said.

During the program, they visited places such as the Economy, Trade and Industry Ministry, the Bank of Japan, the Bank of Tokyo-Mitsubishi UFJ and Tokyo Stock Exchange Group Inc.

"We have long been engaged with Myanmar but the reforms are unfolding at a faster pace than expected. The government seems serious this time," Nagase said, referring in particular to Myanmar's decision last September to suspend a Chinese dam project at Myitsone due to concerns it may flood historical sites nearby.

"The suspension was a surprise," he said. "It reflects President Thein Sein's desire to listen to the people's desires, and we would like to offer assistance that meets the needs of local people."
JICA is organizing follow-up workshops in Naypyitaw in February and in Yangon in March to assist in the country's economic reforms.

Tokyo Stock Exchange Group, meanwhile, is considering enhancing ties with Myanmar by signing a memorandum of understanding that would enable TSE to provide technical assistance in developing a capital market.

TSE hopes that a solid footing in Myanmar would give it a greater presence in Asia as it is falling behind the Korea Exchange, which has already helped set up stock exchanges in Laos and Cambodia.

"We feel increasing pressure from South Korea," said Masahiro Takada, head of TSE's International Corporate Strategy. "If we are successful in helping out Myanmar, hopefully we can win more business opportunities with other exchanges in Asia."

Takada also said that if Myanmar adopts a TSE-model securities exchange, it would be "an advantage for Japanese financial firms operating in the country in the future."